Mandatory COOL Rules Released

Mandatory COOL Rules Released: Implications for Cattle Producers

Derrell S. Peel Extension Livestock Marketing Specialist

Updated: October 31, 2003 USDA’s Agricultural Marketing Service (AMS) issued the proposed final rules for mandatory Country of Origin Labeling (COOL) this week. AMS will accept comments from all interested parties until December 29, 2003. Thus, the final rule could be modified some from the current proposal. The rule issued this week is over 200 pages in length but I will attempt to summarize the essential components below and provide an overview of the implications for cattle producers.

Highlights of Mandatory COOL - Mandatory COOL will take effect October 1, 2004 - The act covers the following products sold at retail: o Beef, pork and lamb (whole muscle and ground) o Fresh and frozen fruits and vegetables o Seafood (wild and farm-raised) o Peanuts - Requirement: products must be labeled as to country of origin in an obvious (visible) manner that does not interfere with any other label requirements. - Food service is excluded, including deli’s and salad bars in retail stores - Processed foods are excluded, however, the rules for what is processed are unclear - Processed food exclusion is based on two guidelines: o Products that are changed in character . Examples include: orange juice; bacon o Products that are combined with other products to make a new product . Examples include: bagged salad; fruit/vegetable trays; mixed nuts o However, the rule listed the following as examples of covered products: . Seasoned pork loin; cooked roast beef; canned salmon; breaded shrimp - Covered meat products include “All muscle cuts of beef, lamb and pork whether chilled, frozen, raw, cooked, seasoned or breaded” plus products that meet FSIS definitions of “ground beef”, “ground pork”, or “ground lamb”. - To be labeled “Product of USA”, cattle must be born, raised and slaughtered in the U.S. - Retailers must provide country of origin information to final consumers and must retain records for 2 years. - All suppliers of a covered commodity, whether direct or indirect, must provide origin information and maintain records for 2 years. - Both retailers and suppliers are subject to fines of $10,000 per violation for willful violation of the act. - Retailers and suppliers are also subject to any other applicable statutes, e.g., food labeling as covered by FDA rules. - USDA-AMS will conduct compliance reviews and will initiate investigations and enforcement actions.

1 Supplier Recordkeeping The rule states that “any person engaged in the business of supplying a covered commodity, whether directly or indirectly, is required to maintain records that establish and identify the immediate previous source and the immediate subsequent recipient of a covered commodity, in such a way that identifies the product unique to that transaction, for a period of 2 years from the date of the transaction”.

In general, USDA has not specified exact records but rather left each sector of the industry to use existing records, if available and appropriate, or develop such new records as will comply with the general guideline above. In the case of cow-calf producers, most of the records may already exist in many cases but in some cases producers will have to make extra effort to ensure that each sale of calves is linked to herd records that document origin. The biggest challenge for the cow-calf sector is that COOL applies to cows and bulls, which means that cows and bulls that cannot document origin after September, 2004 would only be eligible to enter food service markets. Individual calf identification (ear tags) is not required (cannot be required by USDA) and may not be essential for cow-calf producers but probably would be helpful to link specific calves or sets of calves to the appropriate herd records.

For stocker producers and feedlots, the rule clearly states that records must link animals by source to sale groups. In other words, purchased animals must be traced through the operation and linked to sale groups in such a way that the identity of animals is maintained through the operation. The most feasible way to do this in most cases is likely to be with some sort of individual animal ID. Stocker producers will likely need to tag animals on arrival to link them to the source records and subsequently to the sales groups after animals are commingled and sorted. Stocker producers or feedlots that use Mexican or Canadian cattle may also need to maintain records that demonstrate “segregation plans”, that is, to document that the identity of imported animals was maintained separately from domestic animals.

USDA has indicated that affidavits may be used to facilitate animal and product transactions. These affidavits would certify the correct origin of the animals or products and certify the existence of records to document the origin. As such, these affidavits are not self- certification and may not be used in lieu of complete records.

There is still some political uncertainty over whether congress will appropriate funds to implement COOL as scheduled. Additionally, there continues to be some proposals to modify or repeal COOL but all of these require congressional action. There also continues to be considerable debate over the potential benefits of COOL and the level and distribution of costs to comply with the COOL regulations. Nevertheless, it appears that producers should move deliberately to comply with the law and stay tuned for future developments.