AMI commends the House and Senate Farm Bill conferees for removing the Senate’s ban on packer ownership, feeding or control of livestock. This provision would have destroyed good businesses, harmed livestock producers and created economic instability in rural America. We applaud the conferees for ultimately rejecting this forced divestiture scheme. We also applaud the conferees for rejecting the Senate’s anti-arbitration amendment, which would have made contractual conflict resolution an uncertain and potentially lengthy and costly process.
The meat industry, however, is extremely disappointed that this Farm Bill mandates country of origin labeling for meat, produce, fish and peanuts, and defines U.S. meat products as coming only from animals born, raised and slaughtered in the U.S. This mandate will saddle the U.S. livestock, red meat and supermarket industries with nearly $1 billion in additional annual costs, and the U.S. Department of Agriculture with an additional $60 million in annual oversight costs. Furthermore, the mandate may require meat packers to pay a fee to USDA for certifying and auditing this labeling program, which is the equivalent of a tax. The cumulative effect will be to drive value out of the meat production chain, capital investment out of rural communities and some smaller operations out of business. And of course, meat will be more expensive for consumers – hardly the outcome predicted by those who support this mandate.
Coupled with these domestic costs, mandatory country of origin labeling is sure to create international problems and provoke responses from our key trading partners. Last year, for example, one-third of U.S. beef exports and one-third of U.S. pork exports went to our two NAFTA partners. Canada, the U.S.’s largest export market, suggested in press reports yesterday that it would consider a WTO challenge to this legislation. The U.S. imports about 3.5 million feeder pigs and 2 million hogs each year from Canada. Last year, U.S. pork exports to Canada were valued at $160 million; U.S. beef exports were valued at $274 million. We import about 1 million feeder calves each year from Mexico. The value of our beef exports to Mexico last year topped half a billion dollars and our pork exports reached nearly one quarter billion dollars. Disruptions in these markets could be disastrous for U.S. meat companies and livestock producers.